Tuesday, January 02, 2007

The Fifth, And Final, Financial New Year's Resolution

1. Give 5% of my income.
2. Open a Roth and automate contributions.
3. Earn the full employer match in my 401(k).
4. Open and automate contributions to a travel fund towards a savings goal of $2,000.

And now, the final (financial) New Year's resolution:

5. Triple my net worth.

As of right this second, my net worth is $3,449.91, excluding checking. By the end of 2007, I'd like to be worth $10,200.

To reach this goal, I need to add $6,750.09 to my net worth in 2007. I think it can happen. If I contribute $100 per paycheck to my Roth, that's $2,600 plus growth. If I also contribute $80 per paycheck (plus match) to my 401(k), that's $3,580. That's $6,180 right there, and if I can add $570 to personal savings (as a new mini-emergency fund, perhaps), I can meet this goal. It sounds big, but (because my current net worth is so small!) it's actually quite achievable.

Perhaps you've noticed that these goals represent quite a jump from my current savings levels. That's because, after a couple more discussions with my parents, I've decided to accept money from them on a monthly basis. I feel a little more comfortable doing this knowing that under the budget I've drafted for 2007 and the goals I've set, I'll be saving or giving to good causes all but 4% of the "new" money. If something happens to change that, all of these goals that incorporate hard numbers will need revision and never fear, you will hear about it. Until then, this is the plan.


Anonymous said...

Why exclude your checking account?

English Major said...

Moom (have I mentioned how much I love the Moomins?), the reason I exclude my checking account are twofold:
1) Because I think it's artificially inflated at the moment, given that none of my December bills (January rent, December utilities) have cleared yet.
2) Because I'd rather not deal with the "how much cash do I currently have on hand but am nevertheless about to spend?" part of the calculation. I like only counting the stuff that works on a slightly more extended timeframe.

I'm open to alternate methods, though.

English Major said...

The reason I exclude my checking account is twofold.

Carry on.

john said...

English Major - Don't forget that towards the end of your life, say 2040, start diversifying that money in safer investments like bonds so you can avoid another possible stock market collapse at the time of your retirement. I believe Vanguard can do that for you automatically.